Finance minister Arun Jaitley has reportedly written to RBI governor Raghuram Rajan suggesting a review of sen... Read More

NEW DELHI: The finance ministry has decided to take a relook at recent appointments of top-level public sector bank executives as well as a clutch of proposals to designate chairmen just before the UPA demitted office, in what is seen as a direct fallout of the recent arrest of the Syndicate Bank chief by CBI on alleged corruption charges.

Senior finance ministry officials told TOI that a review has become necessary in view of the irregularities that have come to light.

Finance minister Arun Jaitley has written to the Reserve Bank of India governor Raghuram Rajan, who heads the appointment board that selects state-run bank chiefs, as well as cabinet secretary Ajit Seth, who processes all papers for the appointments committee of cabinet, sources said. Some of the appointments processed during UPA's closing days lacked transparency and there are indications that some political considerations may have played a part, they added.

In a letter to the finance ministry, CBI chief Ranjit Sinha has pointed to some irregularities that have been noticed by the investigative agency during the Syndicate Bank probe. Sources said CBI has suggested a "legal scrutiny" as it has found clues suggesting that ACRs and interviews "were managed" and some middlemen also played a role.

Sinha said Jain was appointed despite having "poor" ACRs. "We have told the government that appointments deserve to go under legal scrutiny. The government has to take a call. There are reports of irregularities in several appointments. We have informed the government about it," the CBI chief said.

For the past few years, appointment of several bank chiefs, executive directors as well as independent directors have been viewed with a degree of suspicion and have often resulted in controversy. The candidates are selected on the basis of an appraisal of the confidential reports (ACRs), which carry 70 marks, and candidates appearing for interviews for executive directors and CMDs can get another 30 marks. Apart from the RBI governor, financial services secretary, an RBI deputy governor and external experts are part of the appointments board. Similarly, there is no clarity on what goes into deciding the allotment of banks.

There have been instances of some of the candidates barely opening their account in the interviews but still being recommended for appointment based on their ACRs. In 2012, while appointing a second-rung executive, the department of financial services was accused of changing the grades from "very good" to "outstanding", making the executive eligible for the job. Once the gap was pointed out, the appointments committee of cabinet had put the appointment on hold, but later cleared it.

(Arun Jaitely along with RBI governor Raghuram Rajan ahead of a meeting with the Central Board of Directors of the RBI in New Delhi.)

On several occasions, the department of financial services has changes the criteria for appointment. For instance, to become a public sector bank CMD, the candidate should have been an executive director for at least two years and should have at least two years to go for retirement. Often these stipulations have been tweaked.

For instance, this January, as reported by TOI, the government allowed general managers of public sector banks who had less than the stipulated three years to go for superannuation to appear for an interview. This allowed five candidates to appear for the interview at a notice of just a few hours. The exercise to com,plete the selection 13 EDs came weeks before election were announced and on the Anand Sinha was to demit office as RBI deputy governor.

But what really attracted attention in the corridors of ministries was the UPA government's decision to interview candidates for bank chiefs late last year even when the first vacancy was not arising till this August. Another talking point was the cut-off date of August 6 for fixing the eligibility, which usually is the first or the last day of the month. The unusual date and the relaxation in the two-year retirement norm expanded the field to 19 candidates, compared to eight who would have been eligible if the rules were not tweaked.

Around the same time, the appointments board had called only one candidate for an interview for the job of a managing director in State Bank of India, the country's largest bank.

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